Question 1

Pedro hires Andrea to negotiate the purchase of a sailboat for Pedro.Andrea decides to buy a sailboat from Sally that meets Pedro's specifications.Andrea tells Sally that the purchase is really being made by Pedro,and Andrea and Sally sign a written contract,with Andrea signing on Pedro's behalf.Based on this situation:

Accepted Answer

Andrea signed on Pedro's behalf, but explicitly told Sally that Pedro was the one making the purchase. Therefore, Andrea is not liable because she did not intend to be bound by the contract. Pedro, on the other hand, is liable because he was the intended purchaser and Sally reasonably relied on Andrea's representation that she was buying on Pedro's behalf.

Question 2

The fact that Holly may hire employees to work at a lingerie shop that she manages,despite the fact that her employment agreement with the owner says nothing about Holly's right to hire employees,is an example of:

Accepted Answer

Implied authority is authority that is not expressly granted but is implied by the circumstances or conduct of the parties. In this case, Holly's ability to hire employees may be implied by her position as a manager and the nature of her job duties.

Question 3

Mike,a league official,calls Beth,asking her to referee a soccer game.Beth is not obligated to serve as a game referee.If she accepts the assignment,Mike will tell her the exact start time of the game,the fact that she must wear an approved uniform,and the amount of compensation she will be paid for serving as referee.Once on the field,Beth is in complete control of fulfilling her responsibilities.Beth is considered an:

Accepted Answer

Beth is acting as an independent contractor because she is not obligated to serve as a referee, and once on the field, she is in complete control of fulfilling her responsibilities. She is not under the direct control of Mike or the league, and she is responsible for obtaining her own equipment and transportation to the game.

Question 4

Bob sells real estate in Knoxville,Tennessee for a real estate sales company.One afternoon,he shows a client two homes in Knoxville,and the client tells Bob that there is a great cabin for sale in Gatlinburg,about 40 miles from Knoxville.Bob drops the client off in Knoxville and travels to Gatlinburg to check out this property,because he would like to purchase a place for his family to "get away" on weekends.As he is entering Gatlinburg,he accidentally hits and injures a pedestrian.In determining whether Bob's employer can be held liable,a court will:

Accepted Answer

The answer of Bob sells real estate in Knoxville,Tennessee for...

Question 5

A principal gives an agent express authority to "do what it takes to get my car running right." The authority that the agent has to enter into contracts for the purchase of auto parts is:

Accepted Answer

The agent has implied authority to enter into contracts for the purchase of auto parts because it is necessary to fulfill the express authority given to "do what it takes to get my car running right."

Question 6

Mary has been hired to write courses for a Web-based training organization.Mary works at the organization's corporate office.She is given content guidelines,a contract for each course that she writes,and she is paid a flat fee upon satisfactory completion of the course.It can take anywhere from two weeks to six weeks to complete a course.The organization wants its affiliated contractors to work in its corporate office with a regular forty-hour workweek,unless they need to be elsewhere in order to conduct content-related research.The organization provides a computer to Mary.Mary also is able to use the services of other employees at the organization for the purposes of word processing and editing.Is Mary an employee,or an independent contractor?

Accepted Answer

The answer of Mary has been hired to write courses...

Question 7

Why can an apparent agency be created only through the representations of the principal,but not those of the apparent agent?

Accepted Answer

The answer of Why can an apparent agency be created...

Question 8

Kathy owns an apartment building on the edge of a densely-populated city.It has become dilapidated.It would be more expensive to renovate the existing building than to tear it down and rebuild,so she hires the Big Boom Demolition Company to implode the building.Kathy,who knows nothing about demolitions,simply tells Big Boom that she wants the demolition completed by August 1.She will be on vacation in Japan at the time,and will return on August 8.Mike,who has twenty-one years of demolition experience and is the manager of Big Boom,secured the proper governmental permits,and set the explosive charges.On August 1,at the time allowed in the permit,the explosives are detonated.Although barriers were set up keeping the public away for a radius of one-half mile in all directions,the debris scattered over a three-quarter mile radius,harming several people.This was because Mike used more dynamite than was necessary.What are the relationships of the parties,and who is liable for the injuries?

Accepted Answer

The answer of Kathy owns an apartment building on the...

Question 9

Principal has entered into a six-month contract during which Agent will sell Principal's products on a commission basis.Although Agent is complying with all terms of the agreement,during the third month Principal tells Agent she is no longer is authorized to sell his products,and will receive no further commissions if she does.Which of the following is true?

Accepted Answer

Principal has the power to terminate the agency at any time, but doing so without cause breaches the contract, meaning Principal does not have the right to terminate the agency without facing potential legal consequences.

Question 10

Anne was hired by Peter to sell a condominium in San Francisco.The asking price for the modest two-bedroom unit was $2,300,000.Peter told Anne he would sell the home for as low as $2,100,000,but that she should try to obtain the highest possible price,without disclosing the fact that he was willing to accept $2,100,000.A good friend of Anne's was in the market for a two-bedroom condominium in San Francisco.In fact,this friend had come to Anne to help her find a place and negotiate for it.Anne's friend said that she could afford to spend no more than $2,000,000.When Peter hired Anne to sell his condominium,Anne told her friend about it and the asking price.Anne told her friend,"Don't even bother.He won't go below $2,100,000; that's his bottom price." Anne then proposed to her friend that they "pool their resources," with Anne fronting some money through her friend,but not having Anne's name on the contract as a purchaser.Before they could finalize the details,Anne's friend received a raise and decided to buy the condominium.Anne negotiated a price of $2,100,000 on Peter's behalf.Peter later found out that Anne had told her friend about his bottom price,and about the plan for Anne to help buy the house.What claims,if any,does Peter have?

Accepted Answer

The answer of Anne was hired by Peter to sell...

Question 11

As the Wyoming Tetons are playing the Missouri Ozarks in a baseball game,a fan who is sitting near the Tetons' dugout starts yelling at Mickey Macho,one of the Tetons' relief pitchers,telling him that his pink minivan makes him look like a suburban family man.Macho,because he feels insulted,picks up a nearby bench and throws it at the fan,who is injured as a result.The fan then sues the Tetons.The fan could recover from the Tetons:

Accepted Answer

The answer of As the Wyoming Tetons are playing the...

Question 12

Which of the following is not true regarding notification of agency termination?

Accepted Answer

Termination of an agency without appropriate notice to third parties does extinguish an agent's actual authority to act on the principal's behalf. However, it may not extinguish the agent's apparent authority unless proper notice is given.

Question 13

Susan hired an agent,Ricardo,to buy food for her restaurant.Susan told the manager of her supplier,Good Food,that Ricardo could buy supplies on her account.Unfortunately,Susan caught Ricardo stealing cash from the register,and fired him immediately.Susan took no steps to notify Good Food that Ricardo no longer had the authority to purchase food on her account.After he was fired,Ricardo went to Good Food and purchased $1,000 of food in Susan's name.Ricardo sold the food to his friends in order to acquire money to leave town.Is Susan liable to Good Food?

Accepted Answer

The answer of Susan hired an agent,Ricardo,to buy food for...

Question 14

Donna contracted with Michael's Drug Corporation to buy sedatives on behalf of Clark,a dentist.Clark instructed Donna to use Donna's own name,and to not disclose to Michael's that she was working on Clark's behalf.If Donna signs the contract in her name only and Clark refuses to honor it:

Accepted Answer

Donna is acting as an agent for Clark, and therefore, she is liable on the contract. However, she can sue Clark for indemnification to recover any losses she incurs as a result of Clark's refusal to honor the contract. Indemnification means that Clark will cover any expenses or liabilities that Donna incurs as a result of her actions on Clark's behalf.

Question 15

John is hired at minimum wage in a fast-food restaurant.John works at the counter taking customer orders,accepting payment,and giving the orders to the customers.John must work in accordance with a detailed procedures manual.John is:

Accepted Answer

John is an employee because he is hired to work for the fast-food restaurant and is paid minimum wage. He is not an independent contractor because he is not operating his own business and is following a detailed procedures manual. He is also an agent because he is representing the restaurant by taking customer orders, accepting payment, and giving orders to customers on behalf of the restaurant. Therefore, the best choice is D - an employee, as well as an agent.

Question 16

Adam was a factory sales agent for the Wave Warrior,a line of personal watercraft.His territory was the Atlantic coast of Florida,and he sold to retail dealers.One Friday morning Adam made one sales call,but at 10:00 a.m.,he headed to Tampa for the weekend.His boss was unaware of his early departure.Adam took the most powerful Wave Warrior with him.Even though he was outside his territory,he put the craft in the water and gave numerous sales demonstrations on Friday afternoon near Tampa.He made two sales,and arranged for delivery to be made through a Miami dealer,one of his favorites in his territory.Adam was not supposed to make sales in this manner,but he realized it was unlikely that his employer would find out.After his second sale,he took the buyer on a ride to show some of the craft's capabilities,and struck a swimmer near the beach,injuring the swimmer.Discuss the liability of Adam and his employer for the injuries.

Accepted Answer

The answer of Adam was a factory sales agent for...

Question 17

Sandy,an old car enthusiast,has been hired by Pat to find and buy a fully-restored 1955 Ford Thunderbird for Pat.Sandy finds such a car in pristine condition,and she would actually like to purchase the Thunderbird for herself.She tells Pat about the car,but Pat declines to purchase the car because it has an automatic transmission.Sandy then buys this car for herself.What has Sandy done in violation of her duty of loyalty?

Accepted Answer

The answer of Sandy,an old car enthusiast,has been hired by...

Question 18

Ann has contracted to be Paul's agent for the sale of Paul's home.The contract provides that the duration of this agency is 120 days.Within the first week,Ann has found a potential buyer and is involved in negotiations.The following week,Paul notifies Ann that he is terminating the arrangement,but Ann proceeds to negotiate a sale with the potential buyer.These negotiations became very tense,and Ann became frustrated with the buyer's unwillingness to move on the price and hit the buyer in the face,injuring her.Because the buyer liked the home very much,Ann and the buyer did negotiate a contract.Discuss the legal issues in this situation.

Accepted Answer

The answer of Ann has contracted to be Paul's agent...

Question 19

Why would an agent not disclose the existence and identity of the principal when negotiating a contract,given that doing so would avoid agent liability on the contract? What should an agent do when the principal does not want to be disclosed?

Accepted Answer

The answer of Why would an agent not disclose the...

Question 20

Which of the following does not automatically terminate an agency?

Accepted Answer

Bankruptcy of the agent does not automatically terminate an agency relationship unless it affects the agent's ability to perform their duties.

Quiz 25: Agency Law